Jobless claims drop, GDP holds steady: Top stories

Markets (^GSPC,^DJI,^IXIC) are digesting new economic data, with fresh jobless claims and GDP figures giving Wall Street an updated view of the economy.

Initial jobless claims for the week ending in June 22 were 233,000, down 6,000 from the previous week. This drop hints at a slight cooling in the job market. The GDP growth rate for the first quarter was reported at 1.4%, coming in line with analyst expectations.

Yahoo Finance's Josh Schafer breaks down these numbers, offering insights into what they reveal about the current state of the economy.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Angel Smith

Video transcript

Our top story this morning.

A slew of economic data.

The US economy grew at an annualised rate of 1.4% in the first quarter.

That's in line with analysts expectations.

We're also looking at the labour market.

233,000 people filed for first time unemployment benefits last week that is actually down from the previous reading and below what Wall Street had predicted.

So let's get into some of the analysis with Yahoo Finance's own Josh Schafer.

A lot of data coming out here this morning here.

What do you think the markets are going to latch on to most here as we're seeing these readings come down?

Yeah, Brad II I mean, I think the general market reaction right now you saw futures move up a little bit.

You didn't see a giant move in yields, right?

So I think generally what the market is telling us about this data is it's not overly concerning.

Remember, we're sitting near record highs.

So to see the market really accept this econ data well and shoot higher, you would probably be looking at something more like an inflation print, not necessarily data of first quarter GD, which ended in March.

But I do think one thing to take out of that GDP print was you saw personal consumption come down again, down to 1.5% on this is the third estimate.

The first estimate.

It was 2.5.

Then it came down to two, then it came down to 1.5%.

So we've been talking a lot about sort of a little bit of a consumer slowdown or maybe just a more cautious consumer.

And that was what some economists were saying about this print is that you're seeing maybe perhaps a little bit more of a cautious consumer within that reading, as far as claims goes, that's been an interesting one to watch because it's really been ticking up higher for most of June and through May.

Now, that's also the time of year.

When you look at a longer term initial jobless claims chart, it normally takes up this time of year, so it's not necessarily unnormal to see that the thing that that's sort of been coupled with is we know the unemployment rate has been rising right.

The unemployment rate is now up to 4% for the first time in a little bit over two years.

And so to see, claims rising with that has sort of been the little bit of, uh oh, restarting to get some sort of sign of concern here.

So I think the market probably OK with the fact that claims came in lower than last week and lower than the week before.

Yes, the general trend has been higher, but we're not moving higher every single week in sort of an obvious direction here.

So perhaps there's not a clear read through from claims to this point, I guess.

How do you think the market is ultimately going to read some of these data prints?

Because you are right.

There's not necessarily anything that's too concerning with in these prints, But it's also not painting this picture of growth and something that we had been accustomed to seeing going back over the last couple of quarters.

So here we are today, and we are starting to see things slow down, I guess.

At what point do you think the market starts to maybe take issue with some of these concerning prints rather than just focusing on exactly what this means for Fed cutting.

It's interesting.

It gets into like the good news is good news.

Bad news is good news, et cetera, et cetera.

Right, And I'm talking about good economic news, being good for stocks or bad economic news being good for stocks for the last month or so, we've kind of been in a regime where bad economic news has been good for stocks because it sort of keeps Fed rate cuts on the table because there was a concern that we were running too hot.

And if the economy is growing too much, then we're worried about inflation and we might cut.

To what extent are we going to get there?

I'm not entirely sure.

I mean, I think that's kind of the great debate right now.

I think it would have to be something in the labour market based on what people have been talking about.

That's the number one thing that I think most strategists you guys talk to every day say is it's labour market is the thing to watch.

And so when we talk about the labour market, our most robust print comes next week after everyone wakes up after a retired night of fireworks on July 4th.

On July 5th, we're gonna get that dream jobs report, and I think that's sort of perhaps maybe the key of OK, does the unemployment rate go up again?

And maybe that's when bad news starts to be slightly concerning.

If you're a truly forward looking person because we know once the unemployment rate starts ticking up and ticking up, it usually keeps moving.

And I think that's one of the key things to watch right now is just how how does that sort of build on itself and keep ticking higher?

As far as the other side of eco data goes, we have the inflation print tomorrow, and those are always a straight read.

You want inflation to come down?

Yeah.

I mean, look, thanks for the reminder as well that right after the Fourth of July, we'll be back here starting up early.

So excited jobs report.

No, it's gonna it's gonna be good.

I mean, while everybody else is kind of chilling, perhaps they'll want to be able to take in exactly what the jobs market is doing, and you got a lot of data that's coming out on the jobs market next week.

Whether that be private payrolls from AD P, that's still gonna come out.

And then additionally, you've got Fed Chair Jerome Powell, who's gonna be speaking in Portugal?

So a little bit of a rendezvous for him and an international flair.

Uh, on that testimony or that speech.

Rather, that's gonna be no holiday for us, Brad.

No, no, but it it it It is interesting when you talk about now how the focus should be or maybe more So is on the labour market.

Because that that's exactly what Stuart Kaiser from Citi was telling us yesterday.

He was saying, Hey, the market and so focused on these inflation prints are kind of missing the bigger story.

What he views maybe as a more important data points at this part of the economic cycle, which is some of that weakening that we're starting to see within the labour.

A lot of economists feel like the trend in inflation is there.

It's gonna be slow, but it's going to happen.

And so if that trend just continues slowly, you kind of know what's happening there and then oh, maybe we should look more at the labour market because you're not exactly sure what's gonna happen exactly.

Great point there.

All right, Josh, thanks so much